Despite General Chip Stock Rise, Outlook for Hynix Is Uncertain

Major semiconductor shares are firming up in the Seoul stock market. On Monday, Samsung Electronics Co. rose as its earnings performance outstripped expectations, and Hynix Semiconductor Inc. rose on expectation of foreign investment in the chip maker.

Samsung Electronics closed the day at 227,000 won ($173), up 25 percent from April 10, when it hit a recent low 182,000 won. Hynix Semiconductor has jumped 40 percent in the last four days after a record low last Tuesday. It ended Monday at 3,405 won.

Samsung reported Monday that while its sales were 8.6 trillion won for the first quarter, down 5.5 percent from the previous quarter, its net profit totaled 1.2 trillion won, up 7 percent, exceeding the profit forecasts of 1 to 1.1 trillion won by analysts.

Despite declines in memory chip prices, Samsung was helped by the weaker won and higher income by the firm's home appliances and digital equipment businesses, the firm said. Its semiconductor business declined less than expected because the firm focused on more profitable items like chips using Rambus memory technology.

Hynix Semiconductor's plan to invite 1.8 trillion won of foreign investment, primarily through depository receipts worth $1 billion, has buoyed its share price. If the plan is successful, Hynix will see some relief from its liquidity problems.

But that is not a foregone conclusion. "Foreigners are likely to demand that creditors extend maturities on Hynix' debt, or swap debts for stocks as a condition for investing," an analyst at Daewoo Securities said. "It is uncertain the creditors will accept such a request."

"A rise in Hynix' share price and an uncertain outlook for foreign investment might encourage investors to unload their holdings in the firm," warned Jeon Woo-jong, an analyst at SK Securities.

by Chung Jae-hong